The worldwide web has become dark and dangerous, with fraudsters using sophisticated methods to snare Indians. We saw digital arrest scams, fake WhatsApp groups, UPI and money mule frauds make headlines through the year, highlighting the need for vigilance and awareness.
Digital arrest
This is an ace in the toolkit of online conmen, and several complaints about the same have been lodged with the cyber cell. In a digital arrest, fraudsters impersonate law enforcement officials, deceiving victims into divulging personal information or sending money under the threat of fake legal cases involving the victim or his / her family. Initially, they contact victims via phone calls, and then shift to video calls on platforms like WhatsApp or Skype. Victims are threatened with a fake digital arrest for alleged financial misconduct or some other concocted reason. Some fearful people succumb, resulting in financial loss and potential identity theft.
To protect yourself from such scams, beware of unsolicited contact from self-proclaimed government officials demanding urgent `legal' action. Scammers often use threatening language, create a false sense of urgency and warn of imminent arrest. They also request sensitive information or payment, promising to "clear your name" or "assist with the investigation”.
Fake service suspension warnings
A new scam has gained momentum during the year, where victims receive calls, WhatsApp messages or SMSs from fraudulent numbers, which claim that their telecom / power, etc, services will be suspended because of suspicious activity. “When victims engage with the scammer, they are directed to a fake `police' or `cybercrime' representative, and pressurised into paying to resolve the fabricated issue. The method is similar to the digital arrest scam,” says Paritosh Desai, Chief Product Officer, IDfy, an Indian identity verification company.
WhatsApp groups & dubious investment tips
In 2024, WhatsApp-based scams witnessed a sharp rise, prompting financial institutions to sound the alarm. HSBC Asset Management and Kotak Securities warned investors about impostors masquerading as officials.
Scammers created fake WhatsApp groups — for instance, VIP861 HSBC GLOBAL SUMMIT and 85-HSBC Global Academy — posing as HSBC India Asset Management. HSBC has issued statements calling out these fraudulent activities and advising investors to exercise extreme caution.
Kotak Securities has also cautioned investors against dealing with unknown individuals posing as company officials. According to Kotak, such entities have been using Indian and international mobile numbers, as well as social media platforms, to commit fraud. The scammers falsely claim to be associated with reputable financial institutions and show fake identification to appear legit.
Fake investment schemes with guaranteed returns
The National Stock Exchange (NSE) has issued multiple warnings about individuals offering guaranteed returns on stock market investments, providing stock tips, and asking for sensitive trading account information (login id and password). Such schemes are prohibited by law and put investors at risk of financial loss or fraud.
To stay safe, the NSE advises investors not to engage with such individuals or share their login credentials. Instead, use the Know / Locate your Stockbroker facility on the NSE website to verify the authenticity of brokers and their authorised personnel.
The rise of money mules
Conmen use a multiplicity of bank accounts to launder money and facilitate illegal transactions. These accounts are opened by individuals, also known as money mules, who are recruited by scammers often through online job postings or social media. Mules are unaware that their bank and social media accounts and phone numbers are being used for fraudulent activities, such as phishing and identity theft. Recently, the Indian government froze over 4.5 lakh such bank accounts, highlighting the severity of the issue.
“The Reserve Bank of India’s (RBI's) launch of the MuleHunter.AI marks a significant step in the fight against financial fraud involving mule accounts,” says Jaya Vaidhyanathan, CEO, BCT Digital, which provides risk management products to banks and financial institutions. The RBI tool uses machine learning algorithms and data analytics to identify potential mule accounts and alert banks and financial institutions. This initiative is part of the RBI's efforts to strengthen the security of the Indian banking system and protect customers from financial fraud.
“These frauds have become a significant challenge for the banking industry and the Indian economy, with some large banks reporting fraudulent transactions worth Rs 400-500 crore every month,” Vaidhyanathan adds.
Also read | Why army veterans are becoming a prime target for financial frauds
UPI scam
UPI scams involve various tactics to deceive victims. “Scammers are sending fake images showing a successful money transfer, then asking the victim to return the `overpaid' amount,” says Desai. Victims may also receive convincing SMS notifications about receiving money, prompting them to transfer funds to the scammer. Additionally, scammers use fake UPI QR codes to take money from victims, or create misleading UPI handles to trick them into sharing sensitive information like PINs or OTPs.
Tips to prevent financial frauds
If you receive calls or messages about legal issues from unknown people claiming to be cops, customs officers, etc., exercise caution. Experts recommend remaining calm and not letting fraudsters exploit your fear. “Legitimate government agencies and law enforcement officers will never demand money or conduct investigations via phone or video calls. Verify the caller's identity and consult trusted sources before taking any action,” says Desai. Additionally, report suspicious numbers and activities to the national cybercrime helpline, 1930, or the Department of Telecommunication, and document all interactions to aid authorities.
Protecting personal information is key to fraud prevention. “Consumers should take steps to safeguard sensitive data, such as PAN, Aadhaar, and bank details,” says Ranjan Reddy, Founder and CEO, Bureau, an identity verification platform for fraud prevention and compliance management. Further, avoid sharing such information over unverified platforms and ensure regular monitoring of credit reports for any unauthorised activities, he adds.
Protect your devices and financial information by enabling multi-factor authentication, especially for financial apps. “Utilise advanced security features like biometric authentication to secure your transactions,” says Desai. You can also regularly review your financial statements to detect any suspicious activity, allowing you to report and address potential issues promptly.
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